Motion compensated inter-frame coding has been widely adopted in various coding standards, such as MPEG-1/2/4 and H.261/H.263/H.264(AVC). VP8 is a recent motion compensated video codec (encoder-decoder) being adapted for some software, hardware, platform and publish environments. The VP8 coding algorithm is similar to H.264 Simple Profile. However, VP8 is tailored to simplify encoding and decoding complexity while delivering about the same performance as the H.264 Simple Profile. One of the VP8 codec features is that the bitstream format is suited for parallel decoding to take advantage of the trend of multiple-core processors in the consumer electronic environment or multiple-cores CPU in the personal computer environment. In order to support parallel decoding, the VP8 bitstream partitions the compressed data into two categories, where the category I partition includes coding modes (mb_mode, sub_mb_mode, mb_skip, etc.), reference index, intra prediction mode, QP information, filter parameter, motion vectors of macroblock, etc. in the frame, and the category II partition includes quantized transform coefficients of residues for the macroblock. The partition associated with the category II, i.e., transform coefficients, can be packed into more than one partition on the basis of row of macroblocks, and a partition token may be used to indicate the association between a macroblock row and one of the packed category II partitions. Since the information associated with the transform coefficients are packed after the prediction data for the whole frame are packed, a conventional encoder system may have to store the transform coefficients for the whole frame. Accordingly, it is desirable to develop an encoder system that provides the partitioned bitstream without the need to store the transform coefficients for the whole frame.